THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

UNIDENTIFIED MALE: (INAUDIBLE) HALA GORANI, CNN ANCHOR: A promise to track down the killers of more than 100 people, while rescue attempts continue for hostages who may still be trapped.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Again, we heard gunfire and we heard grenades and there was a lot of panic, people running, people getting trampled.

(END VIDEO CLIP)

GORANI: And caught in the crossfire, harrowing stories of survival from those who escaped the worst. It is now 5:30 a.m. Friday morning in Mumbai in India. Welcome to our viewers in the United States and around the world. I'm Hala Gorani at the CNN Center. Our special coverage of the terrorist attacks in India's financial capital continues right now.

It has been more than a day now since the brazen terrorist attacks in Mumbai. And the situation, more than 24 hours later, is still far from being resolved with militants still believed on the loose and hostage situations uncertain. Let's get the latest for you. In a nationally televised address, India's prime minister implied that the killers were foreigners, but fell short of blaming Pakistan or any other country.

State media reports the suspected Islamic militants planned the attacks months in advance. They arrived by boat and had even set up control rooms inside the targeted luxury hotels. Police are scouring the wreckage of the Taj and Oberoi, searching for the plotters of Wednesday night's attacks.

India's national security guard are reportedly trying to engage gunmen still holed up in the hotels. One gunman was reportedly killed at the Oberoi. In recent hours, some guests and hostages are also inside. How many, though, at this late hour is still unclear.

Reports say there are two hostages trapped in the Chabad House and Jewish Center. Several explosions have rung out there just in the last few minutes and Indian authorities say two or three gunmen are believed to be inside.

Since the attacks began, at least 125 people have been killed. And more than 300 wounded. In a sign of how the violence is affecting Indian culture, we learned that the country's Cricket Board has postponed the final two matches in England's one-day series in India. Now CNN has correspondents spread out across Mumbai and the region for reaction and coverage, bringing you the latest updates to a still very much developing story.

We have Andrew Stevens. He was right in the heart of the targeted area when the deadly attacks began. Mallika Kapur, she is in Mumbai. She offers a unique perspective on the chaos. This is her hometown.

And Sara Sidner brings us the latest developments from outside the Taj Mahal Palace hotel. Let us go straight to Sara first. For more than 24 hours now Sara Sidner, some people have been holed up in their rooms absolutely terrified at that Taj hotel.

And Sara, you have spoken with people who have friends and loved ones inside the hotel. The wait must be absolutely -- must be absolutely gut wrenching for them.

SARA SIDNER, CNN CORRESPONDENT: It is excruciating. And nobody knows, just like we aren't being able to get a lot of information. The family members are not able to get any information except for they have been able to talk to some of their relatives.

I want to let you meet now Raino (ph), whose family is here. They came to visit from the United States. Raino (ph), you're from here in Mumbai.

UNIDENTIFIED FEMALE: Yes.

SIDNER: Tell me what is happening with your family now? Have you been able to speak with them? And who is inside still?

UNIDENTIFIED FEMALE: My sister and niece are both in the hotel. They are being guests here. And I have been in constant touch with them. However, rescue operations are being carried out until around 1:30 in the morning. Now it is 5:30 on Friday. I have been here since 3:00 in the morning on Thursday.

That's nearly 30 hours. And as of now, I have whatsoever no information about what is being done to rescue them. And I believe that there are many such people in other rooms, too, who need to be rescued. (INAUDIBLE) there seems no operation is being carried out, no police, nobody except for the media.

I don't see how media will help in a rescue operation, but we are really worried. And we want the people concerned to work on this and make us comfortable. See that the people are rescued at the earliest. If there is a terrorist, which I believe there is, as earlier they (INAUDIBLE) said that there are no terrorists. It's not right. There is somebody inside who is preventing the rescue operations. So that has to be taken care of.

SIDNER: You had mentioned the state of your sister who is there. Tell me what is happening with her mentally. Is she OK? UNIDENTIFIED FEMALE: No, she is not. She is already (INAUDIBLE) now she is panicky. And she has been throwing up since the last six, seven hours. I can understand her frustration because it is not easy to be in that kind of a situation.

SIDNER: Do they have food, water? What are the availabilities of things to keep people feeling a little bit better at least being -- having something to eat?

UNIDENTIFIED FEMALE: Yes. There is some kind -- a little bit of food in the fridge, which I suppose it's not enough to be there and survive in the best of environment. But I hope that food is not going to be a major concern. It's the mental stability which is important as of now. They should take action. And let us know what is happening so that we're also in the comfort zone.

SIDNER: OK. Thank you so much, Raino (ph).

UNIDENTIFIED FEMALE: Thank you.

SIDNER: I appreciate it and good luck to your family. That's the latest from some of the families who are out here. There are just a few sort of left wondering what is going on inside this hotel. But I can tell you Hala that the scene has changed drastically from earlier today when there were more barricades and many more cars, ambulances, trucks, police vehicles.

Those have all been pushed aside. And you can basically get a clear shot from here. You can look straight into the Taj and you can see into some of the rooms now. And it's a little odd that there really isn't any cordoning off. The media is just standing and doing live shots here.

But really there is not a lot of action going on inside. Though, as you just heard, there are still people holed up inside for certain at this hour -- Hala.

GORANI: And this tells us that there is still at least one of the attackers inside the Taj. Are we not even sure of that?

SIDNER: Well, that is what we heard about three hours ago. And that still has not changed as far as we know. There was one person, one suspected terrorist who was still being sought after inside the hotel. There was word from the police sources -- they basically said that he -- they believe he was wounded and getting very tired.

And there was going to be some sort of action soon, but again, that was about three hours ago. And we haven't heard or seen anything yet except for the fact that some of what looked like security measures outside the Taj have now been sort of pulled back a bit -- Hala.

GORANI: All right and we've heard several times that the situation was on the verge of being resolved at the Taj and that hasn't happened. In any case, our Sara Sidner thanks so much. She's been following that story for several hours now and we will be reconnecting with her a bit later.

Now the Taj and Oberoi hotels were not the only landmarks targeted in Mumbai. The gunmen hit several other locations frequented by tourists in India's commercial capital. They opened fire at the cafe Leopold. That's a popular hangout for Westerners.

An institution in Mumbai, you can see it there halfway between the two hotels on that Google Earth map. To the north, a gunman also targeted a major landmark, the (INAUDIBLE) Timpanist (ph). That's a Victorian building that houses one of the busiest railway stations in India.

It was carnage there about 24 hours ago. Authorities rushed to those scenes. The gunmen attacked then the Cama Hospital and also a Jewish center. This was all coordinated and appears to have been planned for quite some time. Let's get more now on that Jewish center in Mumbai. It is called the Chabad House, the five-storied structure and home to several Jewish families.

The building is a local landmark. It was formerly known as the Nariman House. It is owned by the ultra-orthodox Jewish group Chabad Lubavitch. The Chabad House Rabbi and his wife are believed to be among the hostages being held inside right now.

Members of an Israeli rescue team are on their way to Mumbai to assist in freeing the hostages. Now our Andrew Stevens is near Mumbai's Chabad House. He joins us now by phone with the latest. Who is still inside that Jewish center? Do we know, Andrew?

ANDREW STEVENS, CNN CORRESPONDENT (via telephone): We don't know for sure Hala, but a lot of reports have been saying it is the Rabbi and his wife and two kids visiting from Israel and perhaps another younger family member of the Rabbi. Just in the past five minutes or so, there's been a sharp increase in activity in the streets.

This is the main street that runs through (INAUDIBLE), which is only about three kilometers or so from the Taj Mahal hotel and the Oberoi hotel. It is a much poorer end of town, though. And off this main street is Chabad House. We can't get any closer to it, but certainly in the last few minutes there have been several jeep loads of police arrived, fire trucks arrived, more military figures have also arrived and if I look behind me I can see one of two ambulances are also taking up a position.

Now what we know at this stage is that the gunmen are still in the house. This is a five-story house. It's been said that the hostages may be on the second and the third floor of that house. That anyone who approaches the house is met with a hand grenade, which is across from the house.

There have been three explosions just in the last four hours, which sounds very much like hand grenade explosions here. However, the streets are filling up. So it does appear that there is some sort of activity about to happen. Obviously we can't see with our own eyes the house. We're probably 50 meters from it. But it is behind several crumbling low rise offices (INAUDIBLE). We'll have to wait and see, but certainly there is something going on now.

GORANI: Well Andrew, earlier we saw people released from that Chabad House. Do we know why they were released?

STEVENS: Well there were two separate releases. The one was the -- another younger family member and two of the (INAUDIBLE) in the house managed to slip out of the house early this morning evading the gunman. Now the other ones, there's been a little bit of confusion about. There's six or seven people have managed to get away from a house or police got them away from the house, which was right next to Chabad House.

So this was another place, which was firmly in the line -- in the firing line, if you like, of the gunmen in the house behind, but they're the people who have been cleared. That house is now empty. Obviously that makes the task for the military easier and less chance for any innocent bystanders being caught up in any sort of rescue attempt.

GORANI: But I presume some of those who left the housing complex there were able to speak with authorities. Did we get any information from them? Or is that information just not being released?

STEVENS: Well, I saw them as the last couple left and I tried to speak to them, but they really weren't speaking. All they were saying (INAUDIBLE) left in the house and they were whisked away by the police. The authorities are obviously (INAUDIBLE) and Hala (INAUDIBLE) this entire (INAUDIBLE) crisis has been a complete lack of hard information, hard numbers.

Exactly what is going on where the authorities have been very, very careful about giving too much away. Numbers they put out (INAUDIBLE) been retracted. And there is an awful lot of speculation as can you imagine. There's lots of rumors that ripple through the crowd (INAUDIBLE), so really it's quite difficult to get a firm handle on this.

GORANI: It is, indeed. And thanks very much for keeping us up to date there. It is a puzzle. We're missing many pieces to this puzzle in order to get a complete picture. But little by little, we are able to understand what has happened in Mumbai in this commercial capital. Ten sites attacked including this Jewish center.

Well earlier Israel's foreign ministry spokesperson, deputy spokesperson, commented on the situation at the Jewish Center and said exact details as Andrew Stevens was just saying are very hard to come by.

(BEGIN VIDEO CLIP)

VOICE OF ANDY DAVID, ISRAELI FOREIGN MINISTRY: We have information of Jewish -- the Chabad House, it's a place for gathering for Jews and Israelis who want to pray. We know that the Rabbi and his wife and maybe a few others were taken hostages. We have a lot of concern for their lives. We don't know exactly what the situation is there. It's very difficult to get accurate information. (END VIDEO CLIP)

GORANI: Well it's still not clear who is behind the attacks. But Indian police have already arrested nine suspects. You see there on the left hand side of your screen surveillance photos from the train station that was attacked and it shows several men carrying guns. You see it there -- automatic weapons. But it's not clear whether they're gunmen or undercover police, further confusing the situation.

Of those nine suspects, authorities say seven are fishermen which would actually confirm the scenario that potentially some of these attackers used boats in order to dock on to the Mumbai area. Witnesses say the attackers came ashore on the waterfront wearing jackets and carrying big bags. Now from there, police say the gunmen hijacked several cars, including a police van -- you see it there -- and broke up into at least three groups to carry out the string of attacks.

The police van, the attackers in the police van actually shot at that crowd of people you see there. A Mumbai spokesman says no one has claimed responsibility for the deadly attacks. But several Indian news outlets say they have received e-mails from a group calling itself the "Deccan Mujahideen" that really nobody has ever heard of, saying they were the ones who carried out the violence.

And of course, you can more on these attacks in Mumbai at our Web site, cnn.com and cnn.com/international. You'll find all the latest developments, analysis, and videos. And you can also watch our sister network, CNN-IBN. That's all at cnn.com/international.

A short break, when we come back, people around the globe have watched with horror and empathy as Mumbai reeled from the audacious attacks. We'll tell you what world leaders are saying and we'll take a look at what's on the blogs as well. Stay with CNN, our special coverage of the Mumbai attacks continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GORDON BROWN, BRITISH PRIME MINISTER: We have an incident which has shocked and outraged people around the world. This is the loss of innocent lives. People just going about their daily business who have been caught up in a web of terrorism. And I believe that we've got to do everything we can now to help the Indian authorities as they deal with what is a terrorist outrage, which has become all too common in the country.

(END VIDEO CLIP)

GORANI: The U.K. Prime Minister there, Gordon Brown, reacting to the terrorist attacks in Mumbai. Well the president-elect of the United States, Barack Obama, also releasing a statement saying that the people of India whose democracy will prove far more resilient than the hateful ideology of the groups that perpetrated the attacks, among many reactions from world leaders.

Well Guillermo Arduino is keeping an eye on Web sites and other sources for reaction. He joins us now from the newsroom. OK, what is going on out there in the blogosphere...

GUILLERMO ARDUINO, CNN CORRESPONDENT: We have a lot. We have a lot (INAUDIBLE) particularly things are going very, very fast. People filed so many posts. Some are worried that this may just be the beginning of more attacks, Hala. People are concerned about their relatives in Mumbai. But perhaps the highlight is that they insist that many critical parts of this story remain uncertain.

Now I've been monitoring coverage in some newspapers online as well. The "Corriere Della Sera" has the Mumbai story on its front page. They highlight that one Italian citizen is among the more than 100 deaths after the attacks. They cite three names of the seven hostages of Italian origin still inside the Oberoi Trident (ph) hotel according to the newspaper.

And the Toronto" "Globeandmail" (ph) has this title. Canadians among hostages. And they mention a U.S.-based group saying that two of injured are Canadian. Also the press quoted government officials saying six Canadians were among hostages. But the (INAUDIBLE) says they have no confirmation of it yet.

Now a few hours ago CNN's Colleen McEdwards spoke with Arun Shanghag in Mumbai. He's been updating his blog and posted some pictures of what he saw there as well. Arun grew up a flew blocks away from the Taj hotel. And he told CNN he saw so many bullets as he was walking around and noticed that people were in sort of a haze, giving opinions on where these attackers came from. Colleen asked him how this changed Mumbai.

(BEGIN VIDEO CLIP)

VOICE OF ARUN SHANGHAG, BLOGGER IN MUMBAI: I -- I just don't know. I think I'm still in a state of shock sort of. I'm waiting until tomorrow. I'm still very cold today. I'm just like -- want to take pictures and I just want to document this today. I think it has changed me. I hope it does not.

We have come back from so many terrorist attacks in the past. I just hope our city can just say you know what, this happened. Fix the system. Get the politicians, you know, to do the right thing. The police are great -- and then just give them the resources to do their work, do their jobs. I just hope we don't -- this doesn't change us long term.

(END VIDEO CLIP)

ARDUINO: Now Arun added that he's afraid that people may simply have a delayed reaction to the attacks -- Hala.

GORANI: And also we've been hearing from our viewers all over the world, you mentioned Canadians. Other nationalities, all infected by these attacks. Because the targets were hotels frequented by foreigners and tourists. What about our viewers? What have they been saying?

ARDUINO: Well one from Pakistan, Adeel Hafeez Abbasi, says "without an investigation, it's unfair to blame the attacks on Pakistan. This is not the time to point fingers. But for Pakistan and India to unite and fight terrorism."

Also, Ashwin Sinha from India e-mails us and says "India needs to stand up and once again show how well it can maintain its fragile relationship with Pakistan. And both countries should fight back the common problem they face together."

And lastly, Taran Besov writes, "I'm beginning to hate the word resilient. We Indians may be resilient. But more than that indifferent. We need to stop ignoring and start acknowledging that this is totally unacceptable."

So you see how Hala how this other -- this last guy actually mentions more or less what Arun said in his blog. Well for our viewers, e-mail us your thoughts. The address is yourviews@cnn.com. Be sure to include your name and where you're writing from.

GORANI: All right and we'll read a selection of your notes and e-mails a little bit later. Thank you Guillermo Arduino.

ARDUINO: Thank you.

GORANI: A short break, when we come back, terror grips one of the busiest financial capitals in the world. We continue our coverage. Usually bustling Mumbai comes to a standstill after armed gunmen strike. How will the deadly attacks affect the city and the way it does business around the world? We'll take a look at that angle after this.

(COMMERCIAL BREAK)

GORANI: Welcome back. Terror has now gripped Mumbai for more than 24 hours and the crisis is far from over. CNN's Eunice Yoon reports on how the attackers struck at India's financial heart.

(BEGIN VIDEOTAPE)

EUNICE YOON, CNN CORRESPONDENT (on camera): Coordinated terrorist attacks struck the heart of Mumbai, India's financial capital. Attackers assaulted at least two five-star hotels and the city's largest train station, a Jewish center and a hospital. Blasts were centered in Nariman Point (ph) often referred to as the Manhattan of Mumbai.

The city formerly known as Bombay is home to the nation's biggest stock and commodity exchanges and the main center of groupie (ph) trading. The explosions took place close to important financial institutions, the Reserve Bank of India, the Bombay Stock Exchange and the National Stock Exchange of India.

Two of the hotels targeted in the attack, the Taj Palace and the Oberoi were frequented by international business people. Previous guests at the Oberoi include News Corp Chairman Rupert Murdoch and Microsoft founder Bill Gates. The Taj Palace Hotel was built by the founder of the Tata Group (ph), one of India's most powerful companies and a firm headquartered in Mumbai.

Local authorities are keeping the exchanges of stocks, bonds and the currency closed in the wake of the attacks. The first time trading has been shut in more than three years. The blasts are already raising fears among investors and come at a time when the market is down nearly 60 percent since the start of the year on worries over the ongoing global economic crisis.

(on camera): Of greater concern though, the longer term impact the attacks could have on foreign investment and India's economy. International companies have been investing in India, betting that the country's rise as an economic superpower could rival China's. The fear is that the attacks could halt future business and investment plans now in India.

Eunice Yoon, CNN, Hong Kong.

(END VIDEOTAPE)

GORANI: Well the entire country is grappling for answers and has many questions. Who exactly is responsible for the attacks? And who has the capability to carry out this string of terror? Stay with us.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I passed bodies and people with bullet wounds and I guess an old man had passed out from the flames.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

HALA GORANI, CNN INTERNATIONAL ANCHOR: Fighting for control of two besieged hotels and a Jewish center more than a day after terrorists struck Mumbai.

Welcome to our viewers in the United States and around the world.

Police are still trying to oust of a few stragglers from their positions. Gunfire and explosions have echoed throughout the day and night. It's been more than 24 hours. Authorities scouring the five- star Taj and Oberoi hotels hoping to capture the plotters of Wednesday's deadly attacks.

Hostages and hotel guests may also be inside. India's national security guard says one gunman was killed at the Oberoi a few hours ago.

We don't know for certain whether captives are trapped in the Chabad House Jewish center, though report say several gunmen are holding two hostages there at the very least.

India's prime minister said he believes the killers are foreigners. Indian media report one of the arrested terrorists is from Pakistan.

Since the attacks began, 125 people have been killed and more than 300 wounded.

Now India's prime minister has arrived in Mumbai. He's there right now to assess the situation firsthand. He has addressed the nation before leaving and promised that authorities will track down the terrorists.

Listen.

(BEGIN VIDEO CLIP)

MANMOHAN SINGH, INDIAN PRIME MINISTER: It is evident that the group which carried out these attacks based outside the country, had come with single-minded determination to create havoc in the commercial capital of the country.

We will take the strongest possible measures to insure that there is no repetition of such terrorist attacks. We are determined to take whatever measures are necessary to insure the safety and security of our citizens.

(END VIDEO CLIP)

GORANI: Manmohan Singh there, the prime minister of India.

Well, Mr. Singh used the phrase external forces to describe the attackers. And that phrase is sometimes used to refer to Pakistani militants.

But Pakistani officials caution against a rush to judgment in all of this. Earlier we heard from Pakistan's ambassador to the United States, Husain Haqqani.

(BEGIN VIDEO CLIP)

HUSAIN HAQQANI, PAKISTANI AMBASSADOR TO U.S.: Pakistan's elected government and this government was elected on a platform of opposing terrorism. The leader of the ruler of the party that now rules Pakistan was herself a victim of terrorism because of her strong stance against terrorism.

It's a new government. And this government has, in the few months it has been in office, waged war against the terrorists. That is why I think the terrorists are actually hitting hard at Afghanistan, at Pakistan and at India and around the world.

But that doesn't mean that the Pakistani government or for that matter the Pakistani nation supports terrorists in anyway. We do not.

(END VIDEO CLIP)

GORANI: All right. The Pakistani ambassador to the United States there.

Now Indian authorities are trying to determine who exactly is behind these deadly attacks and what their motives might be.

Award-winning columnist Eric Margolis joins me now from Toronto to talk more about this. He's author of "War at the Top of the World: Struggle for Afghanistan, Kashmir and Tibet."

Eric, thanks for being with us tonight.

ERIC MARGOLIS, AUTHOR: Thank you.

GORANI: What is -- what goes through your mind? What do you make of what's happened over the last 30 hours or so in Mumbai?

MARGOLIS: Well, India's 9/11 and intolerable outrage for India because the Indians are furious, has got to blame somebody. It's hard to find a target as it was for the U.S. after 9/11.

But, first of all, we're seeing a number of converging crises. Some of the attackers called for India to get out of Kashmir where the rebellion has been going on now for 19 years against Indian rule and up to 40,000 people have died in fighting there.

There is the question of Afghanistan. The war there is spilling over into Pakistan. But India and Pakistan are vying for influence in Afghanistan. Afghanistan now pitting them against each other.

And then there are -- the Indians say Pakistan is encouraging terrorist groups inside of India. So you really have all these things mixed together very dangerous brew.

GORANI: Right. You have overlapping conflicts and issues that might be causing some of this activity. But on the ground level, it seems like it's extremely sophisticated even if it's a group that very few people have heard of, using power boats and with a lot of ammunition, enough to last almost two days.

What do you make of that? The level of sophistication?

MARGOLIS: Well, certainly the -- they were inspired, the attackers were inspired by other Jihadist movements in the region in Afghanistan and in Pakistan. But I agree. It shows an extraordinary level of sophistication, though the attackers from what we've seen were very young.

It also seemed like suicide attackers, too. They really didn't plan to come back out alive, though I find it very curious that no specific demands were made and no statements were -- have been read out yet anyway.

But it is new. And also the other factor is the searching out and trying to attack westerners...

GORANI: Right.

MARGOLIS: ... says to me that the anger over the western occupation of Afghanistan is triggering some of this hatred and violence in the region. GORANI: I was going to ask you about that shift in strategy, because we're seeing right now in the United States and, of course, all over Europe and we understand from reports that some of these gunmen were specifically targeting holders of British and U.S. passports.

Is this something that Americans should be concerned about right now?

MARGOLIS: Yes, they should. There -- as I said, there is intense anger throughout South Asia amongst Muslims about these attacks in Afghanistan. Even the president -- President Karzai, an American supported president in Afghanistan, is called for a cessation of American bombings in Afghanistan.

And also inside Pakistan which is raging Pakistanis. So it's a very volatile issue. Does not excuse any of these attacks. But we have to understand what's motivating them.

GORANI: Right. Right. It explains the motive.

Now let's look a little bit forward to the next couple of months and an Obama administration. What needs to happen for this kind of terrorist activity, specifically targeting westerners? The kind of terrorist activity also that destroys the fabric of a city like Mumbai and others around world to stop. What needs to happen?

MARGOLIS: Well, there -- we can't stop all terrorist acts or violence. India's big cities are racked by violence of all different types. We've seen recent examples of Hindu gangs attacking Muslims and Christians. So there are a lot of problems in India.

Certainly a (INAUDIBLE) or diplomatic settlement of the war in Afghanistan would go great distance to ending a lot of the regional tensions and so will that other major problem in the area which is the Kashmir issue which has gone on since 1947 and...

GORANI: I was going to say, that's like -- that's like saying you need to resolve the Arab-Israeli conflict. I mean people almost...

MARGOLIS: Well...

GORANI: People almost end up saying, you know what, if you have to wait until that conflict is resolved for there to be calm, then you're in trouble.

MARGOLIS: This may be tougher to resolve than the Arab-Israeli conflict. But it needs to be done because it's the world's most dangerous dispute. Nuclear armed India and Pakistan. They're nuclear arsenals are on a three-minute hair trigger alert.

They're fighting all the time along the border. A flare-up like this -- if Pakistan was to prove to be behind these attacks on Mumbai, the Indian army will be very tempted to go and attack Pakistan.

GORANI: Well...

MARGOLIS: This could resolve in a nuclear confrontation.

GORANI: That's right. Well, that would be the worst-case scenario, but my mind, Singh, the Indian prime minister, sort of hinted that he though Pakistanis were behind this. I mean it was thinly veiled reference to Pakistan.

MARGOLIS: Oh, it sure was. But Indians always accuse the Pakistanis of being behind what they call cross-border terrorism. And there may be rogue elements in Pakistani intelligence who are, in fact, behind it.

I -- I really don't think anybody senior in Pakistan would decide to go in and kick India in the shins like this and risk getting a thrashing and -- rage in nuclear power.

GORANI: Right.

MARGOLIS: But India has a homegrown people. India's younger Muslims, there are 155 million Muslims in India. And in the past they've been very passive and quite (INAUDIBLE) but now some of the younger generations, they're feeling they're third class citizens and obviously some of them have taken a page from the bin Laden book and starting Jihadist actions in spite of efforts by the Indian government to help Muslims and to uplift them.

It's a very disturbing situation.

GORANI: All right. Eric Margolis, thanks so much for your thoughts. An author and award-winning columnist joining us live from Toronto.

Thank you very much.

Well, we were talking -- thank you for that. We were talking about that group. It's little known, very few people have ever heard of the name. It calls itself the Deccan Mujahideen and it's the one that claimed responsibility for the Mumbai attacks.

Security analysts, though, are saying we don't know much about this group. Analysts say they aren't sure if the Deccan Mujahideen is affiliated with anyone else or if they may be an offshoot of another group that we know.

Intelligence analysts in India and the U.S. think the Mujahideen may be affiliated with one of two organizations that have carried out attacks in India in the past. Even if their MO was different. The Indian Mujahideen and Lashkar-e-Tayyiba. Those are the two groups.

Now Indian Mujahideen is a Muslim militant group that emerged about a year ago. But analysts say they do have the organizational capability to carry out attacks such as the ones we've seen.

Lashkar-e-Tayyiba, which means "army of the pure," is an Islamic extremist group that's claimed responsibility for several attacks on Indian troops and civilians in recent years. They are suspected of being behind the string of bombings that hit Mumbai commuter trains and platforms during rush hour in July 2006. You'll remember that.

The U.S. State Department called Lashkar-e-Tayyiba one of the largest and best trained group fighting against Indian authorities.

The horror in Mumbai is by no means over. The suspected attackers are still holed up in the two luxury hotels that were hit and there may still be people in those hotels as well.

Mallika Kapur joins us now on the phone from outside the Oberoi.

What's happening right now inside the Oberoi? Are there still hostages in there? Or people were too afraid to leave their rooms? What do we know right now, Mallika?

MALLIKA KAPUR, CNN CORRESPONDENT: We know that there is one gunman still inside the Oberoi. Now as far as hostages or residents who are still afraid to leave or employees of this hotel, we don't know if any of them are still left inside the hotel or how many are left.

We do know that police forces have managed to evacuate about 40 people in the last day or so but that doesn't tell us how many people are still left. We knew that there were two gunmen about six hours ago, and about five hours ago one gunman has been killed. So we know that the standoff is still continuing inside. And authorities have yet to nab one more gunman, Hala.

GORANI: There -- are there ordinary people, Mallika, outside the Oberoi who say they have loved ones or family members inside the hotel and waiting for word from them?

KAPUR: To be honest, outside the Oberoi there are some people right now. But they're mainly just curious onlookers. There is a heavy, heavy media presence. But, no, we really haven't come across people outside who are waiting for their loved ones. Those people, I think, are at home or, you know, desperately trying to -- you know I think in most cases people are trying to reach people in the police forces and see what the information they can get.

Outside, though, there are just curious onlookers and a very heavy media presence at the moment. And also there's -- it's now 6:00 in the morning, 10 past 6:00, and people are starting to come out for their morning walk and going for a jog. The Oberoi is located right by the ocean and people are, you know, coming out for their morning walks and morning runs outside.

GORANI: Are you are still hearing gunfire, explosions, the sound of grenades going off? Anything like that in the last few hours at the Oberoi?

KAPUR: No. The last -- no, the last six hours that I have been here has been actually very quiet. It's been strangely calm like an eerie calm and an eerie quiet over the city, certainly outside the Oberoi. It has been very, very calm. Also just the (INAUDIBLE) the lights in the hotel were on which wasn't the case before. When you look at it, it's -- from the outside standing where I am, it actually looks strangely normal about all the people and satellite trucks around it.

Even the hotel, there are a few lights on. You can't really tell what's going on inside, Hala.

GORANI: Right. So what we know regarding the Oberoi is potentially a few attackers in there, at least one, but no word really on any guests or hostages?

MARGOLIS: That's exactly correct. One gunman, apparently, still left inside. No word on how many hostages or residence who are too scared to come out or employees of the hotel.

GORANI: All right. Mallika Kapur, live in Mumbai, part of our team of reporters on the ground there. Thanks very much for your report.

Stories of fear, anger, sorrow and survival coming out of Mumbai. We'll bring you powerful eyewitness accounts of the attacks and the unfolding aftermath.

You're with CNN. Our special coverage continues.

(COMMERCIAL BREAK)

GORANI: Well, we've been getting some powerful eyewitness accounts from Mumbai in India including from members of CNN's own staff.

Here's Mallika Kapur.

(BEGIN VIDEOTAPE)

KAPUR: It was a night they would rather forget.

SONALI CHATTERJEE, WITNESS: One explosion practically knocked me off my feet, the first big one, and that's when I saw the (INAUDIBLE). There's an explosion on the roof. That was -- I'm just on a phone call, and I just -- I was standing and everything shook. So that was very, very scary.

KAPUR: As gunmen attacks nine locations across Mumbai, Alex Chamberlain found himself held at gunpoint in a restaurant at the Oberoi Hotel.

ALEX CHAMBERLAIN, WITNESS: A gunman came in to the restaurant, and we were ushered, or some of us were ushered into the kitchen. I think some of the others got out the backdoor. And then the gunmen told us to go up the stairs, up the fire escape stairs, about 30 of us altogether.

So we were walking up each flight of stairs, and then he stopped us after two or three flights and told everyone to put their hands up and said, where are you from? You know are there any British or Americans here? Show us your ID and all this. But people started getting out their business cards or ID cards or whatever.

And my friend said, you know, tell them you're Italian or something if they come up to you, you know? So I was there with my hands up just thinking -- basically, I was in, you know, in serious trouble.

KAPUR: Yasmin Wong was nearby in her room in the Taj Hotel when she started hearing gunshots. She turned off the lights and hid in her room.

YASMIN WONG, CNN INTERNATIONAL EMPLOYEE: All I saw was like a lot of smoke and I saw a guy outside my window above me and my window who basically had smashed through the window and was hanging out of the window.

KAPUR: As the extent of the attack sank in, anger grew, not only at the terrorists, but also the Indian government for failing to see it coming.

VIJAY MALLYA, CHAIRMAN, KINGFISHER: This is India's 9/11. And, you know, as much as we never thought it could ever happen to us, it has actually happened. And I think that the government needs to really start acting tough.

KAPUR: Even before the hostage crisis was over, funerals were being planned across Mumbai. For police, for ordinary people, for all those that did not survive Mumbai's horror.

Mallika Kapur, CNN, Mumbai.

(END VIDEOTAPE)

GORANI: The unanswered question in India and around the world is still why?

Our Jonathan Mann posed that question to the Deepak Chopra, the Indian physician and philosopher.

(BEGIN VIDEOTAPE)

DEEPAK CHOPRA, CHOPRA CENTER FOR WELLBEING: What we have seen in Mumbai has been growing for a long time. And the war on terrorism and the attack on Iraq only compounded the situation.

What we call collateral damage and going after the wrong people actually turns moderates into extremists. And that inflammation then gets organized and it appeared as this disaster in Mumbai.

Now the worst thing that could happen is that the there's a backlash on the Muslims from the fundamental Hindus of India which then will perpetuate the problem. Inflammation will create more inflammation.

JONATHAN MANN, CNN ANCHOR: Let me jump in on that, though, because you're presuming something very important which that it's Muslims who have carried out these attacks and in some sense with Washington in their sights.

CHOPRA: Ultimately, the message is always towards Washington, because it's also the perception that Washington, in a way, directly or indirectly funds both sides of the war on terrorism.

We fund our side, then our petrol dollars going to Saudi Arabia through Pakistan, ultimately these terrorist groups, which are very organized -- you know, Jonathan, it takes a lot of money to do this. It takes a lot of organization to do this.

Where is the money coming from? You know, the money is coming from vested interests. I'm not talking about conspiracy theories but what happens is, our policies, our foreign policies actually perpetuate this problem, because, you know, 25 percent of the world's population is Muslim, and they're the fastest growing segment of the population in the world.

The more we alienate the Muslim population, the more the moderates are likely to become extremists.

MANN: I hope you'll forgive me for jumping in because someone might say the dispute over Kashmir has caused so much violence, so much terror, and that's not Washington's fault and the war on terror hasn't really been the problem there.

This is the moment where India has to stop blaming Pakistan, and actually ask Pakistan for help, because Pakistan is going to become a failed state, as a breeding ground for this terrorism.

In turn, it's not enough for Zardari to say I condemn this. He should be telling India, what can I do to help eliminate those terrorist groups and as far as Kashmir is concerned, unless they find an equitable solution for the Kashmiris, which is independent of India's interest, independent of Pakistan's interest, the problem is going to perpetuate, so it's all interlinked.

There has to be a Kashmir resolution. There has to be the ceasing of enmity between India and Pakistan, and there has to be also a broader perspective for America that declaring a war on terrorism is an oxymoron.

War is what the people wearing uniforms and pressing buttons from 35,000 feet above sea level causing collateral damage, they call it the war on terrorism. The other side perceives it as awe and terror.

OK? So it's perspective.

Right now, the Americans have to come up with a policy, hopefully President-elect Obama, who says you know, 25 percent of the world's population is Muslim. How can I use this 25 percent to overturn the tables on these terrorist groups? Because these terrorist groups -- the worst thing that could happen for them is if Obama wins the sympathy of the Muslim world by making friends with them.

Stay with us. We'll have a look at the other headlines in the news after this.

(COMMERCIAL BREAK)

GORANI: We'll get more from Mumbai in just a moment but first here's a glimpse of how Asian stocks are doing this Friday morning. Let's put up the board there.

Now in Tokyo, the Nikkei 225 is managing a modest gain there, about half a percent at 8410. As for the Seoul Kospi, it's up almost a percent and the S&P ASX 200 in Australia is up more than 2 percent since the open.

All right. Here are the other headlines now.

Thailand's prime minister has declared a state of emergency at Bangkok's two main airports. They're overrun with anti-government protesters and they've been closed for two days.

Thousands of passengers are still stranded there. The demonstrators belong to the People's Alliance for Democracy and they've been leading protests since May.

And at least one other important development this day, the Iraqi parliament has voted to approve a new sweeping security pact with the United States. The deal includes a firm timetable for the withdrawal of all American troops from Iraq by December 31st, 2011.

The assembly was forced to postpone the vote on Wednesday due to some last-minute negotiations among Shiite and Sunni factions.

A nightmare, still not over, from eyewitness accounts to the terror, to live reports on the ground, and all of the latest developments, in a rapidly-developing story. More of our special coverage of the Mumbai attacks, after this.